Review|PLTR FY26Q3: Thirteenth Consecutive Quarter of Accelerating Growth; Softer Bookings Metrics Leave the Outlook for Sustained High Growth Intact

Results and Bookings

1. Total revenue grew 96% year over year. The Rule of 40 score rose to 158%, marking its 13th consecutive quarterly increase. 26Q4 guidance implies year-over-year growth of approximately 88%, above market expectations of 82%–86%.
2. U.S. Commercial growth did not materially decelerate, but remained below our internal bogey. 26Q3 revenue was $984 million, up 148% year over year, versus our internal estimate of $1.00–1.02 billion, or 152%–157% growth. Full-year revenue guidance of more than $3.559 billion, representing growth of at least 143%, was slightly below our internal estimate of $3.57–3.63 billion, or 144%–148% growth.
3. U.S. Government growth accelerated to 96% year over year in 26Q3, above our internal bogey of 80%.
4. Several leading indicators point to slower bookings, which may have contributed to the share-price pressure following the earnings release. Total contract value (TCV) was $2.918 billion, up 6% year over year versus 49% in 26Q2. U.S. Commercial remaining deal value (RDV) was $6.517 billion, up 4% sequentially versus 27% in 26Q2. Total RDV increased 2% sequentially. Total remaining performance obligations (RPO) were $4.88 billion, slightly below $4.90 billion in 26Q2; on the company’s rounded reporting basis, both were approximately $4.9 billion, broadly flat sequentially.

Shorter Contracts May Weigh on Bookings Metrics Without Signaling Weaker Underlying Demand

• Based on management’s earnings call commentary and the expansion in NDR and ACV, I favor the first explanation in the table below: Palantir may be deliberately shortening contract duration to preserve repricing flexibility at renewal. If a customer’s ACV can increase 5–15x within one or two quarters, as management indicated, signing a three-year fixed-price contract could effectively give away future pricing upside. Shorter contracts give Palantir the opportunity to adjust pricing annually based on customers’ subsequent usage depth and platform dependence.
• Another possible explanation relates to customer approval thresholds and budget cycles. At many companies, an annual commitment of $10–30 million may fall within the CFO’s or CEO’s approval authority, whereas a three-year contract worth approximately $100 million would typically require board approval. In the second half of the year, some large projects may need to wait until the following year’s budget is finalized. Karp’s comments that the “contracting timeline has completely changed” and that the period from initial contact to establishing a business relationship has shortened materially may indicate that shorter initial contracts help lower customers’ internal approval barriers.
• In 2026, some enterprise AI spending still comes from annual innovation or discretionary budgets and has not yet been incorporated into core IT budgets. Customers seeking to sign multiyear contracts may need to wait until the next budget cycle to move this spending into their regular budgets. On the earnings call, management cited a five-month, $15 million contract signed in 26Q2. This may mean the customer initially committed through year-end and would renew after the new budget was finalized. This type of contracting structure affects metrics such as TCV.

Potential Explanations for Slower Bookings Metrics

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